BHP and Antofagasta uphold yearly outlook for copper production

Two of the world’s largest mining companies have maintained their annual outlook as the FTSE 100 groups posted solid growth in copper production in the last quarter.

BHP generated 410.1 kilotons of copper in the three months ended September, up 9 percent from the same period last year, thanks to record production at South Australia’s Olympic Dam following a smelter upgrade.

Meanwhile, Antofagasta saw its copper volumes rise 40.1 percent from the previous quarter, after improved water availability nearly doubled production at Chile’s Los Pelambres mine.

Antofagasta continues to expect copper production for the current fiscal year to reach 640,000 to 660,000 tons, which is at the lower end of its target range.

Over the next 12 months, when construction work on the Los Pelambres desalination plant is completed, production is forecast to be between 670,000 and 710,000 tons.

BHP has also kept its outlook for production and unit costs for all metals unchanged this year, although CEO Mike Henry warned of significant near-term uncertainty.

Higher inflation and interest rates are driving commodity prices down and an economic slowdown in many major economies, including China, where the company ships much of its iron ore.

Yesterday, Rio Tinto warned that global economic problems meant that iron ore deliveries from its Pilbara operations in Western Australia would be at the lower end of the guideline this year.

Nevertheless, Henry said BHP remains “well positioned, with a portfolio and balance sheet to meet external challenges and a strategy positioned to capitalize on the global megatrends of decarbonization and electrification.”

Copper is considered an essential element in the planet’s transition to clean energy because of its use in renewable technologies, such as electric vehicle batteries, wind turbines and solar panels.

Yet the Australian miner still earns huge sums of money from coal, partly as a result of the war in Ukraine, which is disrupting power supplies and encouraging consumers to switch from liquefied natural gas.

This increased the company’s profits 173 percent to $30.9 billion last year and allowed it to return a record amount of cash to shareholders.

By comparison, copper represents the vast majority of Antofagasta’s manufacturing output, although the metal’s declining price in recent months means the company’s financial performance has been impacted on a relative basis.

In its interim results, the company announced that pre-tax profits fell 61.9 percent to $679.6 million and announced a cut in dividend payments after paying a record amount to investors last year.

Antofagasta Shares are down about a quarter in the past year after rising in 2021. This morning they were down 2.7 percent at 1,078.5p. BHP shares have fallen by about 29 percent in the past six months, but only by about 5 percent in the past year.